InterContinental leads FTSE risers after broker upgrade

InterContinental Hotels has been recovering well since its recent low in July, and today its shares have seen another burst of activity after an upbeat analyst's report.

Credit Suisse, as part of a hefty 56 page note on the hotel sector, has raised its target price for InterContinental from 527p to 910p and upgraded from neutral to outperform. As a result the company's shares have climbed 43p to 811p this morning, making it the biggest riser in the leading index. Credit Suisse said:

"Of the large European hotel universe, InterContinental is the most exposed to a potential RevPAR [revenue per available room] recovery, as it is a pure hotel company with high exposure to the US; with brands that are taking market share and is reaching the final stages of a reorientation of its business model. Our new target price is 910p, possibly rising by an incremental 92p if RevPAR recovery is quicker than forecast, and a further 70p if 50% of its structural cost saving target is retained."

Elsewhere Carphone Warehouse has slipped 3.6p to 185.6p on competition fears after the T-Mobile/Orange link-up, but Vodafone has ignored that, rising 2.8p to 137.3p, perhaps on relief the company is not splashing out cash on trying to do the deal itself.

Fashion group Burberry has celebrated its promotion to the leading index - it will replace Thomson Reuters when that company is delisted on Thursday - with a 10.5p rise to 516p. Thomson meanwhile is up 3p at £18.73. The quarterly index changes are due this week, and will be based on tonight's closing prices.

Overall, with the strength in the mining sector today, the FTSE 100 is up 34.11 points at 4967.29 while the FTSE 250 has added 119.78 points to 9056.24.

Greene King's trading statement - it said demand for pub food had pushed up overall sales sharply in the first four months of the year - lifted its shares 16.8p to 497.2p. Panmure Gordon said:

"Greene King has reported robust trading over the summer, with like for like sales at managed pubs up 4.6% and margins down less than 100 basis points. The Belhaven (Scotland) business continues to gain significant market share, whilst the performance in tenanted pubs and brewing is in line with our expectations.

"We are slightly concerned that the group is struggling to spend the rights issue proceeds, given that the pub property market no longer seems to be a buyers one, whilst the opportunity to repurchase debt significantly below face value appears to have passed. We upgrade our previously below consensus earnings per share forecasts by 15.5% in 2010 to 44.6p and 12.8% in 2011 to 45.7p. Our target price increases from 440p to 500p and we retain our hold recommendation."

The news also helped other pub groups. Enterprise Inns is up 12.3p to 178.8p while Punch Taverns has added 3.9p to 141p and Mitchells & Butlers is 5.5p higher at 281.7p.